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Inside Washington (02/07/2012)
  • WASHINGTON (2/8/12)--Senate Minority Leader Mitch McConnell, of Kentucky, and 38 other Republicans announced their intention to file an amicus brief and join a court challenge to President Barack Obama's recent recess appointment of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB), as well as three other recess appointments  to the National Labor Relations Board (NLRB). In a letter dated Feb. 3, the Republican senators said the appointments "were unprecedented and unconstitutional" (American Banker Feb. 7). Cordray's appointment has not yet been challenged, but lawyers for Flatbush Gardens apartment complex in Brooklyn have asked a judge to throw out a complaint from the NLRB, arguing the recess appointments are invalid. Critics of the appointments argue that the Senate was technically not in recess, but was in a "pro forma" session during which no business is conducted when President Obama made the appointments on Jan. 4.  The Justice Department has issued a legal opinion supporting the decision …
  • WASHINGTON (2/8/12)--Federal Reserve officials will meet Wednesday to discuss Capital One Financial Corp.'s $9 billion proposed acquisition of ING Direct USA, the central bank said. The meeting will be closed to the public (American Banker Feb. 7). The Fed held three public hearings in Washington, Chicago and San Francisco on the proposed deal under which Capital One would buy the U.S. online banking unit of ING Group. Community bankers and consumer advocates have argued against the deal, saying it will create another "too big to fail" institution. Capital One has said the deal would reduce systemic risk and create jobs …
  • WASHINGTON (2/8/12)--A federal investigation into banks' credit card payment protection products could be the impetus for a change toward a more consumer-friendly market for the plans. The Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau (CFPB) are investigating Discover Financial Services' marketing of its credit card payment protection products (American Banker Feb. 7). The products work similarly to insurance policies. Issuers who sell protection plans waive or defer credit card payments for card holders who experience events such as the birth of a new baby, a job loss or death. Banks on average return 21 cents of every dollar in payment protection premiums to consumers in the form of suspended or cancelled debt--a gross payout ratio that would be illegal if the products were categorized as insurance. The top nine card issuers posted $1.3 billion in pre-tax profits on the plans in 2009. That figure represents more than half of the $2.4 billion collected in fees paid by protection plan enrollees, according to the Government Accounting Office. The CFPB could be an agent of change, the Banker said. The 2009 Dodd-Frank Act gave the CFPB supervisory and enforcement authority for credit card debt protection products. The agency is reviewing changes to disclosure rules for debt cancellation and suspension agreements proposed by the Federal Reserve for its Regulation Z, according to CFPB spokesperson Jennifer Howard …
  • VIENNA, Va. (2/8/12)--The Financial Crimes Enforcement Network (FinCEN) Tuesday issued final rules that require non-bank residential mortgage lenders and originators to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs), as is required by FinCEN of credit unions and other types of financial institutions. The final rule will be effective 60 days after publication in the Federal Register. The compliance date is six months after publication. In another step intended to combat fraud in the residential mortgage markets, FinCEN last November issued a proposal to require the government-sponsored enterprises--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--to develop AML programs and file SARs with FinCEN.  FinCEN said that taken together the two actions "provide additional tools for financial institutions and law enforcement to hold scammers accountable for their fraud and other financial crimes." The mortgage-related scams FinCEN has identified in its reports include false statements, use of straw buyers, fraudulent flipping, flopping, and identity theft. FinCEN said the new regulations likely will "significantly increase the number of mortgage-related SAR filings; give law enforcement and regulators more comprehensive data on specific crimes; and provide government and industry a more complete perspective on mortgage related crime trends nationwide" …


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